Madsen raises financing for past producer in Red L.

Madsen Gold (TSE) has completed a previously announced $1.2-million private placement.

It has also applied for, and expects to receive, a $300,000 grant from the Northern Ontario Heritage Fund, bringing the total funds raised to more than $1.5 million.

The company’s main asset, the past-producing Madsen gold mine in Red Lake, Ont., hosts proven and probable reserves of 832,900 tons averaging 0.29 oz. per ton. The company thinks the mine could support annual production of 40,000 oz. at an average operating cost of $US250 per oz. for almost six years.

A 3-stage plan has been devised to put the mine back into production. The first stage, which is expected to last five months, entails refurbishing the surface plant and equipment, dewatering the mine down to the 12th level, confirming underground conditions and increasing reserves.

Two subsequent stages will consist of constructing a processing plant, fully dewatering the mine and arranging final financing for production. Total capital costs are expected to be about $10 million.

In the meantime, Madsen may start production on a custom-milling basis within 6-8 months.